CLAIM IV: ANY REVENUES GENERATED BY TAXING LEGALIZED DRUGS WOULD QUICKLY EVAPORATE IN
LIGHT OF THE INCREASED SOCIAL COSTS ASSOCIATED WITH LEGALIZING DRUGS.

DEA Statement

A favorite argument in support of legalization is that education, health care, road
building and a wide array of other worthwhile causes would benefit from the taxes that
could be raised by legalizing drugs and then taxing them.

The Facts

On the whole, it certainly seems better than sending all that money to Colombia.

DEA Statement

The conference participants were extremely skeptical about the claim of a large tax
windfall, and challenged advocates to prove that the amounts of revenue potentially
generated by legalization would counterbalance the increased social costs that would
result from making drugs legal. When asked for specifics, they have no answers.

Are they taking into account the erosion of the tax base as more and more citizens are
unable to work because of drug addiction? Add to this loss the cost of health and welfare
benefits for the unemployed.

The Facts

There is no tax windfall, large or small, right now. The only revenue generated is the
revenue generated from money and property seizures, which is fraught with its own
problems.

The DEA has asked the American taxpayers to support an open-ended program of building
more prisons. When they are asked for specifics, such as how many prisons they propose to
build, they have no answers.

Does the DEA take into account the erosion of the tax bases by the fact that -- by
their own estimates -- two-thirds of the people they propose to throw in prison are
gainfully employed taxpayers? Does the DEA take into account the fact that, once these
people have a prison record, they may be permanently unemployed because no one wants to
hire an ex-convict? Putting people in prison doesn't do anything to reduce unemployment
problems, except for prison guards.

DEA Statement

Health and societal costs of drug legalization would increase. The panel predicted that
drug treatment costs, hospitalization for longterm drug related disease, and treatment of
the consequences of family violence would further burden our already strapped health care
system.

The Facts

Every major study of drug policy disagreed with this point. See the list elsewhere on
these pages.

DEA Statement

There is also real reason to believe that liability suits would be brought against
manufacturers and distributors of drugs as damages to individuals increased, thereby
increasing the cost of products.

The Facts

As opposed to the current situation, where there is no one to bring a liability suit
against.

Liability suits have not yet put the alcohol and tobacco industries out of business, or
made their products too expensive. If this was a real concern, alcohol and tobacco would
still be the major concerns.

DEA Statement

Ask legalization proponents if the alleged profits from drug legalization would be
enough to pay for the increased fetal defects, loss of workforce productivity, increased
traffic fatalities and industrial accidents, increased domestic violence and the myriad
other problems that would not only be high income items, but extremely expensive in terms
of social decay. How much are they willing to pay?

The Facts

The number of fetal defects caused by alcohol are far greater than the number for
illegal drugs so this argument is a red herring. If the DEA was really concerned about
fetal defects, they would concentrate on alcohol first.

The DEA acts like these problems are not here already, and that the best method of
preventing them is to throw people in prison. In every case, these problems are already
here, and throwing people in prison is not the best approach to the problem.

DEA Statement

Some facts which help to confirm the observations of the forum participants may be used
in debates:

Dr. William Olson, former Deputy Assistant Secretary of State for International
Narcotics Matters, outlines the magnitude of the social costs borne now by U.S. taxpayers
because of drugs. In his 1994 essay, "Drug Legalization: Getting to No," he
provides the following:

· 2560 percent of the homeless are addicts, whose homelessness is in large part the
result of addiction and their inability to manage money or make rational, reasonable
decisions. They are increasingly supported at public expense.

The Facts

This is the result of the current policy which is, in itself, a good argument against
what we are doing.

DEA Statement

· 7580 percent of the 1.2 1.5 million teenage runaways are substance abusers, and not
because prohibition made them use drugs or run away.

The Facts

No, and prohibition didn't keep them from using drugs either. Runaways are usually
children who have severe problems at home which cause them to engage in all sorts of
deviant behavior. The drug laws do not do anything to address the underlying problem. The
law only makes the runaways' problems worse if they are caught using drugs.

DEA Statement

· 3050 percent of mental patients are chemical abusers, 5060 percent of these crack
and cocaine. They are largely on public support.

The Facts

The only thing this would show is that people with severe mental problems are likely to
try to self-medicate themselves. It does not show any causal connection between drug use
and insanity, except perhaps that insanity causes greater drug use. It says even less
about what would a sensible public policy for addressing the problem.

DEA Statement

· As many as 11 percent of young mothers use drugs during pregnancy.

The Facts

This is what is happening under the current system. A more sensible approach might
reduce the number.

DEA Statement

· 2.5 percent of all live births, some 100,000 babies are born addicted to cocaine.
They have lifelong learning disabilities and emotional problems.

The Facts

There is no support for this claim at all and the DEA knows it. The DEA is lying.

DEA Statement

· $50 billion is devoted annually to dealing with the health care costs of drug
addiction and its collateral costs. These will not disappear with legalization.

The Facts

Those costs haven't disappeared with prohibition either. In fact, every major study of
the subject says that prohibition only makes those costs greater.

DEA Statement

· There are approximately 500,000 heroin and 2 million other substance abusers. Their
care is increasingly a demand on society.

The Facts

According to the DEA's own figures, shown above, the current policies have had no
effect on this problem at all.

DEA Statement

· There is no way to predict how much revenue would be generated by the United States
Government taxing legalized drugs. Such a scenario depends entirely upon the parameters of
legalization, and what the policy means vis a vis sources of drugs. If U.S. farmers were
given subsidies to produce drugs (as they are given subsidies for tobacco) the U.S.
taxpayers would be responsible for paying for these subsidies. If foreign sources of drugs
(opium or coca) were allowed to supply the raw material for these products, an elaborate
system of tariffs and trade preferences would need to be established.

The Facts

It is true that there is no way to predict tax revenues until one makes some
assumptions about "legalization". One of the reasons is that the DEA doesn't
have a clue how big the market for drugs really is. This should not stop us from
recognizing that prison is a net revenue loser.

These are curious arguments. They bring up the question of whether we should have
subsidies for tobacco in the first place, especially in view of the fact that it kills 100
times as many people as all the illegal drugs combined. Why does our government give
subsidies to tobacco farmers while it throws marijuana (hemp) farmers in prison? Our drug
laws plainly make no sense at all.

Trade and tariffs would be handled as they would for any other commodity and the fact
that tariffs might be complicated is not a good argument for throwing American citizens in
prison.

We also have to ask, who controls the trade and tariffs now? And what are the trade and
tariff rules now?

DEA Statement

· Taxes would likely push the cost of the product up. Taxing the drugs would make them
more expensive at the checkout counter. The drug cartels do not provide a share of their
receipts to their respective governments. They are all business. Anyone going into
competition with them, including the U.S. Government, would have to be all business too,
prepared to cut prices, if necessary, to stay in the game.

The Facts

Prohibition pushes the cost of the product up. The main difference would be that the
revenues would not be used to fund other crime.

The same arguments were equally true of alcohol during alcohol Prohibition.

DEA Statement

· Legalized gambling has not put illegal gambling out of business. In fact, legalized
gambling has produced a whole new group of people who cannot control their need to gamble.
Many states have gone into the gambling business to raise funds for public purposes, with
some success, although as more jurisdictions get into it the profits decline. Meanwhile,
bookies ply their trade as they always have. The reason is the payoff they offer is better
than the legal gambling schemes. For every million dollars wagered, that is, they return a
higher percentage to the winners. Again, it' s a matter of overhead. The bookies are not
trying to build schools, so they don't have to earmark a percentage of the profits for
such endeavors. So long as that is so, they will always have a market that is loyal to
them. The same situation could logically occur if drugs were legal.

The Facts

And prohibition has not put the drug dealers out of business, it has only made them
richer.

In places where gambling is legal, illegal bookies do not have higher payoffs than the
legal gambling schemes, except in the case of state lotteries which have notoriously poor
payoff percentages.

No one contends that any scheme will entirely eliminate the black market in drugs, and
the current policy is the best example. However, a better policy could greatly reduce many
of the problems associated with the black market, as happened with the repeal of alcohol
Prohibition.